HOUSE prices in the north west are set to rise by around 13 per cent in 2003.

The Halifax said it expects to see double digit growth in the region next year, albeit slower than the staggering 30 per cent rise in prices seen this year.

But chief economist Martin Ellis said fears of an house price crash were unlikely to be realised.

éThe continuation of low interest rates, low unemployment and the low proportion of earnings taken up by mortgage payments for a new borrower é which currently stands at 15 per cent é will provide a solid foundation for housing demand. As a result, we expect there to be a gradual slowdown in house price inflation rather than anything more dramatic.é

The north is set to top the league of price rises for next year with the north west in hot pursuit of Yorkshire and the Humber at 15 per cent.

And as uncertainty clouds the City with job losses, reduced bonuses and the adverse effects of falling equity prices, only modest price rises are expected in London, forecast to be around two per cent, narrowing the long-running north-south divide in property prices.

Martin Ellis said: éWe expect house price inflation to slow to nine per cent next year with a narrowing in the north-south divide as prices rise more quickly outside southern England.é

He added that the difficulties facing first-time buyers trying to step onto the property ladder would help curb demand and cause a slow in prices.